South African Power Reduction Impact On BHP Billiton Aluminium

South African Power Reduction Impact On BHP Billiton Aluminium

On 24 January, the South African national power company, Eskom, determined that it had insufficient power to meet demand. An emergency 10 per cent reduction in power consumption by many large industrial users, including BHP Billiton, was mandated. BHP Billiton’s contracts with Eskom specify that the power supply to our aluminium smelters can only be interrupted approximately one per cent of the time per calendar year. Despite this, and respecting the emergency situation faced by the country, BHP Billiton has reduced its demand by the requested 10 per cent.

Power reductions were initially achieved by reducing power by approximately 10 per cent at all three of our Southern Africa smelters. This operating methodology is unsustainable. As we understand that the power reductions are likely to last for a number of years, we have assessed our options to more effectively deal with a longer-term reduction in power.

As a result of this assessment we plan to take the bulk of the power reduction at Bayside (100 per cent owned by BHP Billiton) while Hillside and Mozal will continue at reduced operating levels to comply with the 10 per cent mandatory overall power demand reduction.

We have therefore commenced consultations with our employees about a possible closure of operations of the B and C potlines at Bayside. Total annual production loss will be just over 120,000 tonnes across all three smelters (100% basis), including approximately 92,000 tonnes from Bayside.

Also in South Africa, our 60 per cent owned manganese business, Samancor, is operating at 90 per cent of normal peak power demand although the impact on production is small and felt principally in the Metalloys alloy plant. Our coal operations have been minimally affected and have offered to help Eskom rebuild its coal stocks.